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Newsletter - 02/25/2024



FREE MEMBERS (all times MST):

Free Session THURS @ 10AM

Topic: TBD


What the Heck???

One of the oldest sayings on the Street is that "Markets climb a wall of worry" which means that when markets climb, they often leave most investors behind because of a fear that the "market has gone too far too fast" or "the market is going up on Hopium."  

Here's where it is easy to succumb to FOMO or the opposite, paralysis.  Yeah, we don't do that.  Despite the clearly deteriorating macro picture this is a critical moment for the market: is this the beginning

of a new Bull leg or is it topping.  We will get more evidence this week now that headline tech earnings are largely over.

The temptation in this type of trading environment is to ONLY make a binary trading decision - all long or all short.  I am not doing that and instead, I will continue to be opportunistic regardless of the trade direction.

Remember, for market trend changes, I use the Weekly chart in order to have more confidence and a higher probability that the trend will "stick."  I classify last week's market as very nervous.  This will end eventually but for the time being, the trend is up in large caps with tech the obvious leader.

Week in Review

From TRowePrice:

"Equity indexes generally moved higher during a week shortened by the Presidents’ Day holiday on Monday, although the small-cap Russell 2000 Index lost ground. The S&P 500 Index hit new intraday highs, as did the Nasdaq Composite Index, which posted its biggest daily gain in about a year on Thursday, when NVIDIA added a record USD 277 billion to its market capitalization. After Wednesday’s trading session, the chipmaker reported strong quarterly revenue and earnings that topped Wall Street estimates. The company also increased its full-year guidance on robust demand for its chips, which are used in artificial intelligence applications.

In fixed income markets, traders noted that a lack of sellers in the high yield bond market meant that new issues were met with solid demand. The equity rally sparked by technology company NVIDIA’s strong earnings also appeared to be supportive of high yield bonds.

Federal Reserve Board Governor Christopher Waller opined that higher-than-expected inflation in January, along with the tight jobs market and the economy’s strength in the fourth quarter, “reinforced his view that we need to verify that the progress on inflation we saw in the last half of 2023 will continue."






After consolidating for a couple of days, the SPX broke out to the upside on Thursday.  While certainly exciting, as can see from the fund flows above, the break was not accompanied by strong flows of new money.

I am fully aware that the market is in buy mode and will both manage my short positions and seek new longs accordingly.

I repeat what I said two weeks ago: with every move up, risk goes up even more.



Even with all the excitement over AI chips stocks lead by $NVDA, the NDX barely made new highs on the weekly and the daily.  Furthermore, as the weekly MACDHistogram indicates, momentum is falling, not rising.

Coupled with the anemic money flows indicated above the market is at a critical juncture - either additional indexes join the rally or the market will further demarcate between the "AI Haves" and the "AI Have Nots."

As an example, the Russell 2000, small caps, did not break to new highs on the weekly chart and the MACDHistogram shows momentum has stalled.



Compared to recent weeks, it was one of the "quietest" weeks In terms money flows between bonds, equities, mixed assets and money markets.  For the second week in a row there were net outflows from money markets but not at a level that is indicative of a full "risk-on" market.  

Interestingly, Global equity flows showed continued selling of Healthcare stocks with Financials also showing outflows for the third week.  Otherwise, net inflows were muted.



You probably hearing a lot of chatter about this being an "AI bubble."  Even I have said that the current market reminds me of the early 2000's dot-com bubble.  However, when I started to look at some comparable data, perhaps the only similarity is that the level of "euphoria" surrounding AI is similar to the dot-com period.  

Certainly some of the large cap tech names have moved up swiftly and are technically extremely over-extended but that doesn't mean we are in a bubble.

The following chart clearly shows that on an absolute return basis the current bull market is not even close to the excess of the dot-com bubble.  This only supports that there is a very marked difference between the Tech sector and the rest of the market.


What is even more interesting is that if you look back at the period from 1995 to 1999, annual returns exceeded 20% per year.  The current "bull market" is barely even a year old.

Furthermore, the dot-com period was characterized by exciting STORIES but little revenues or earnings.  Compare that to the current bull run which is being driven by the largest tech companies with actual earnings and (arguably) strong future expected growth.

So why not just pour all of your money into tech?  For a couple of reasons:

  • The earnings outlook for tech is dependent on stable or falling interest rates.

  • While projections are for strong future earnings (next 12-24 months) that assumption does not take into account the sundry list of bad economic trends: rising layoffs, rising rates, sticky inflation, CRE, and numerous geo-political hotspots.

  • The very same tech behemoths that are leading the move higher are also at the same time laying off large numbers of employees.  While there is validity that some of these layoffs are due to those tech companies expanding too quickly, it is telling that in 2023 there were 263,000 tech layoffs and 42,000 thus far in 2024.

Then there is this; if one believes higher rates are coming, recent reactions by the market when it "pivots" to accepting higher rates and not lower ones should be concerning.  Either rates will reverse back down or the market must come down.


I know I sound like a broken record but the longer this market extends in the face of weakening macro conditions the higher the risk becomes that a reversal is that much more destructive.  If you believe the economy is getting better, not worse, then by all means, go for it.  If, however, your thinking is more aligned with my outlook, then being ready to quickly react to a change in weekly trend is the smartest plan of action.

What's Your Plan?


At the end of the day we trade to make more profits.  Seems like a pretty clear cut goal, yes?  But "making more profits" is often mistakenly the end goal when in fact, it is a piece of the larger picture: being able to retire when you want with the monthly income you want.  No one wants to be 70 years old and still HAVE to be working full time, or even part time.  And yet, when people think about their trading and investing, their only goal is to "make more" without knowing HOW MUCH MORE IS NEEDED.

Over my 30 years managing money regardless of the size of the starting asset base (401k's, IRA's, 402b's, etc.), in almost every single case, the client did not have any idea how MUCH growth was needed.  In almost every case the client was taking on too much risk without regard to what was the correct level of risk.

So, is there a way to compute how much risk you should be taking with your retirement accounts?  Well, I am glad you asked because there is.  And you don't need to be a financial planner or retirement planner.  Here's how to do it:

In order to begin this computation, you will need to know a couple of figures:

  • The total balance of your retirement assets.  Let's call this "CRA."

  • The number of years to your targeted age of retirement.  Let's call this "TA."

  • The desired monthly income at retirement.  Let's call this "MI."

  • The expected amount you will receive from Social Security (or other government controlled retirement benefits).  Let's call this "SS."

Before doing an example computation, there are a couple of caveats: 

  • This is an estimate only and not meant to illustrate exact figures.  

  • This is meant to show you if you are "in the ballpark" regarding your retirement goals.

  • Ultimately, this is meant to show you approximately what annual return is needed which thereby guides how much risk you need to take, which then can guide you which assets to invest in.

  • This method assumes a 5% yield on investments at the time of retirement.


For this example we will use the following assumptions:

  • CRA = $100,000

  • TA = 20 years

  • MI = $4000

  • SS = $1500

To arrive at the return all we need to do is follow these steps:

  1. (MI - SS) x 12 = Annual target income at retirement (ATI)

  2. ATI / 5% = Lump sum amount needed at retirement to generate the ATI assuming a 5% annual yield; Let's call this "LSum"

Let's use the assumptions from above:

  1. ($4000 - $1500) x 12 = $30,000 (ATI)

  2. $30,000 / 5% = $600,000 (LSum)

  3. Using a compound rate of return calculator (Investment Calculator). It will require you to modify the Return Rate input to arrive at an End Balance close to your LSum.  In this example, a 9.4% rate of return over 20 years to achieve a monthly income of $2500 ($4000 - $1500) or an annual income of $30,000 (ATI).


The Return Rate in this example if 9.4%.  Using the estimated annual return of the S&P 500 since 1929 of 12%, clearly having a retirement portfolio consisting of total risk equal to the stock market is not needed.  

Instead of investing your retirement assets "to get the highest return" why not instead focus on WHAT LEVEL OF RISK IS NEEDED and then let that guide your investments?  This also meets our first rule of investing/trading: PROTECT CAPITAL by only taking the risk that is NEEDED.

The bottom-line is that this method uses math instead of hope and focuses on risk needed instead of some nebulous return goal.

DOOM List Update


DOOM 1: Nothing really new to report as the news flow for CRE continues to worsen.  We have not reached the "tipping point" yet and when that will happen, it's anyone's guess.  But, the longer that all of these negative forces build up, the worse the reversal will be.  

I will say that there is nothing that has reduced my confidence that CRE will implode.

DOOM 2: Japan spoke about the willingness to step into the FX markets to support the Yen (Yen/USD is back over the 150 level which is where the JCB stepped in last fall) even if that meant selling foreign debt (US Treasuries most likely).

Doom Trades 



From the newsletter two weeks ago:

"Any bounce will be temporary and should be contained to below $50." 

With the current (weak) upward trend in stocks, shorting here involves higher risk than I prefer at this time.  I am close to committing additional capital to get to my target goal of 40%.

I have also decided to add another ETF to trade the coming CRE collapse: $VNQ - the Vanguard Real Estate Fund.  It is currently in a weekly buy with significant overhead resistance in the $90 area.  Again, like $KRE, there is no rush.  Yet.




Weekly remains in a buy but price is in a broader range consolidation.  Until price breaks $31.29 to the downside or it makes a new 52 week high, there is nothing to do but wait.



$TQQQ remains in a weekly buy and a weekly uptrend.  Price is right below moderately strong resistance at the $63ish level.  I am waiting for a proper setup to add to my position.



This week is a critical week.  Weekly remains in a sell but I am watching the $92 support level to enter this longer term trade.

Bitcoin & Miners

From two weeks ago:

"I expect price to hit $50k this week, maybe Monday or Tuesday" and that's what it did.

Look, ignore the noise of price volatility.  The halving is coming in weeks, monthly is in buy, and the BTC ETF's continue to have very strong inflows.


Price weakness in Miners continues BUT in my opinion, this is just a healthy pullback due to recent fast gains.  

I added $IREN this week as diversification amongst my miners.


I have taken 100% of my original investment out of $CIFR, and then some.  But it's price action has been weaker than $IREN and $BITF so for the time being, I have decided to NOT add more.  None the less, the $CIFR I sold added 24% return to my ENTIRE PORTFOLIO.


$BITF price has been strong relative to other miners and price is close to support at the $2.90 level which also happens to be a volume shelf.  I'd like to see what price does there first before adding more.


The thesis has not changed for the BTC miners I own nor has the catalyst event happened.  Even if I take a 100% loss on my remaining miners, I still will make +6% on the sum of the trades.  Not the result I want or think will happen but an example of how trading around a core position can significantly reduce risk.


I was able to close the $UVIX trade for a small 1.7% gain which was a huge improvement over a 50% loss.  I ended up catching the only spike in the VIX on 2/13 and the largest since the end of October 2023.

There were two new Free Trade Ideas over the past two weeks:


We took some heat due to Royal Carribean reporting good earnings but price quickly reversed and is back near the $15.86 support/break level.  Earnings are this week on Tuesday so I need price to break lower Monday.  Royal gapped up 7% and a similar gap up in $NCLH would not be good and at the least, add more time.



Daily is in a buy while weekly is in a sell AND has broken support at $13.46.  This week will decide whether we get stopped out or if the weekly continues downward.



If the tech sector continues to move up I have no intention of merely observing.  However, risk remains elevated, especially with large tech earnings complete.  It remains to be seen if the focus will now move onto something else other than tech, such as BTC and the upcoming halving or if tech remains the bright lightbulb attracting retail moths to their eventually zapping.  I remain confident of my overall macro picture and remind you that I have been saying rates are going up when everyone else was saying they were going down, 6-7 times this year.  I believe given the sum of the data, CRE, regional banks and small cap companies with no earnings (I am looking at you $ENVX) will do the worst over the next 9-12 months.  As always,  I will wait for price to confirm or negate.


The Blog post library is here.


The Video library is here.

This past week the Free Member Live Session discussed how to manage and protect longer term stock holdings.

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Don't forget the Discord live chat is STILL FREE but it will be closing to new members soon.  In fact, we have already started removing non-active members. 

  • In the meantime, come and join us - its the best community out there: Discord.

  • Also, be sure to check out the new page for Daytrading on the website, run by the fine gents @BaconTurkeyClub and @Juggernaut.  If you ever wanted to learn or just watch two pros daytrade live, they are at it every day here: DiscordFuturesChannel.

  • Finally, be sure to check out VampireTrades and his amazing penny stock trades.

Thankyou Family!


Nothing above is investment advice nor should it be construed as investment advice.  It is offerred for entertainment purposes only.  Always consult your advisors before investing any money.  Do not "follow" or "mirror" any trade ideas provided.  Mr.NotAdvice is not a licensed or registered investment advisor.  Do your own research.

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